Correlation Between Enbridge Cumulative and Enduro Metals

Can any of the company-specific risk be diversified away by investing in both Enbridge Cumulative and Enduro Metals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Enbridge Cumulative and Enduro Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enbridge Cumulative Red and Enduro Metals Corp, you can compare the effects of market volatilities on Enbridge Cumulative and Enduro Metals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Enbridge Cumulative with a short position of Enduro Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Cumulative and Enduro Metals.

Diversification Opportunities for Enbridge Cumulative and Enduro Metals

-0.6

Correlation Coefficient

Enbridge Cumulative  Enduro Metals

Excellent diversification

The 3 months correlation between Enbridge and Enduro is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Cumulative Red and Enduro Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enduro Metals Corp and Enbridge Cumulative is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Enbridge Cumulative Red are associated (or correlated) with Enduro Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enduro Metals Corp has no effect on the direction of Enbridge Cumulative i.e., Enbridge Cumulative and Enduro Metals go up and down completely randomly.

Pair Corralation between Enbridge Cumulative and Enduro Metals

Assuming the 90 days trading horizon Enbridge Cumulative Red is expected to generate 0.1 times more return on investment than Enduro Metals. However, Enbridge Cumulative Red is 9.73 times less risky than Enduro Metals. It trades about 0.43 of its potential returns per unit of risk. Enduro Metals Corp is currently generating about 0.03 per unit of risk. If you would invest  1,829  in Enbridge Cumulative Red on October 11, 2024 and sell it today you would earn a total of  90.00  from holding Enbridge Cumulative Red or generate 4.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Enbridge Cumulative Red  vs.  Enduro Metals Corp

Enbridge Cumulative Red

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Cumulative Red are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, Enbridge Cumulative may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Enduro Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enduro Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Enbridge Cumulative and Enduro Metals

The main advantage of trading using opposite Enbridge Cumulative and Enduro Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge Cumulative position performs unexpectedly, Enduro Metals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Enduro Metals will offset losses from the drop in Enduro Metals' long position.

The idea behind Enbridge Cumulative Red and Enduro Metals Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.